Market Briefing For Wednesday, Jan. 29

A rebound in stock prices - coincident with a free-fall in airline traffic, is not an oxymoron at all; but reasonably reflects the global situation. S&P futures, even Monday evening, gave hints for rebounds, both from overall movement to the rising bottoms pattern (see chart technical comments), and a degree of short-covering. Even Tuesday looks to start higher, while Hong Kong (just reopening) reflects the angst with a sharp decline.  

This rising-bottoms S&P pattern with extension coming in the morning to a degree dominated by Apple's comeback (it's a surrogate for the market as we often note), hence they'll try holding it together regardless of news, irrespective of nevertheless terrific earnings, and even if it takes longer than they'd like for production to normalize in China.  

FOMC Meeting is ongoing, not expecting change in rates; will assess.

There's lots of effort to extend the expected rebounding market, but there are serious uncertainties looming too. It does not mean investors are focusing on earnings; as that's a little ridiculous; since what matters is guidance at this point, and for many global multinationals, that's pretty tough here. For Apple it may be a plus this time of year, because they're about to wind-down iPhone 11 production; and start shifting to iPhone 12 (with a next-generation, as yet-unreleased, 5 G Qualcomm chip-set).  

So at worst this allows them more time to enhance supply-chain prep for the assembly line, and if need be, push back the next series a bit (so now we know why the iPhone 12 will be sold-out within minutes of pre-sales in September; making it ludicrous to hear some analysts say demand is not going to be strong... it will probably be the most demand in years).  

What's known today is that HHS & CDC have genuinely tried to reassure Americans in very appropriate ways, that WuFlu isn't rampant here at all (at least yet; and fingers are crossed that it never will be). And just after I commented that airlines will all by themselves reduce travel to China due to load load-factors, United came forth today and cut the majority of all of their flights (about 24) to all China destinations.  

The U.S. is encouraging avoiding travel to China but most companies for sure already have, and zero tourism is a non-issue to even mention. Late Tuesday we hear The White House is telling airlines what I'd suspected this morning would eventually evolve: the U.S. may suspend all flights to to China. Period, full stop. (Aside evacuation flights. China Airlines saying it may also do this voluntarily, and we've call for cutbacks for a few days now, not to mention the lost revenues from basically empty flights now.)  

Where the WHO stands on this is variable; but at least (as I've mentioned before) this is a new era with Genomic Sequencing; hence the makeup of the virus was posted as data by the Chinese, and the HIH (or associates) have already created and started to make a test-kit to definitively gauge if a patient (or even an asymptomatic carrier) has contracted the WuFlu as I term it.  

Meanwhile, the media is admitting building 'more' prefabricated hospitals (we suspected the need was 100,000 beds, not a couple 1,000 bed units to be constructed), and by no means is this situation relaxed at all, even if the 'shock factor' is absorbed temporarily by markets.  

Remember: China's markets were scheduled to be closed for the holiday this week. One clue to how serious this remains in the view of Beijing will be the extension of closing periods for markets; which will be presented as a precaution from people gathering.  

In-reality that will largely be 'cover' for stress and anxiety of prices falling, given that most trading these days (globally) is largely electronic. But yes for businesses (and virtually all factories) that require physical presence, the disruption will be enduring for awhile, and especially supply-chains.  

In-sum: we were not surprised to see the rally, expected it especially as it was a last-ditch short-term technical trend-line support probe. However that does not relate to sustainability; with many fluid factors pending.